The Crash

In 1927, the company's 25th anniversary, sales reached $151 million from 892 stores. Penney predicted $1 billion in sales by the 50th anniversary (achieved on the 49th). The private label program became very successful as a pioneering testing center was built in New York to ensure quality. Stores were getting larger as well as more plentiful. In 1929, with 1,400 stores now (!), the Spokane, Washington, operation became the first to top $1 million in sales.

In light of such progress, Earl Sams initiated another historic step in becoming a national powerhouse. For the first time ever, shares in the J. C. Penney Company were sold publicly in the New York Stock Exchange.

The day that tickertapes across the country first carried the NYSE J. C. Penney Company symbol was October 23, 1929six days before the great stock market crash.

On Black Tuesday, October 29, J. C. Penney stock closed at $13, down from a recent $120. As with so many others, the market collapse marked the founder's downfall. But historically even all-American icons such as John Wayne had to take their falls . The story was in what happened next . With Wayne, you just knew that the big Duke would manage to get back on his feet, dust himself off, and glare ahead at the trouble now requiring immediate action.

But James Cash Penney as a resilient hero like Wayne? At a take, the idea is preposterous. Penney was more like the little loudmouth farmer who would be helplessly gunned down by the cattlemen's assassin in Shane . Look closer, though. In the company's first 20 years , Penneythe energetic pipsqueak who became an ageless, elfin statesman of the business worldactually was the living spirit of what became the Wayne myth. First of all, he was a true Westerner, an individualist if there ever was one. He was also a tough but fair competitor. He was a gutsy risk taker. He had standards that were hard to meet. And he stood for things; his word was utterly reliable. So to ride with Penney one had to be somebody special, and those who did formed a lifelong bond.

Unlike Wayne, however, when Penney took his real fall, he needed a hand up. And the story was in what happened next because many Penney principals refused to help.

The J. C. Penney history is shot through with ironies and twists of fate, some of the best examples beginning with the distance that developed between the founder and many of the Penney high achievers several years before the crash. They saw Earl Sams running their company very successfully while Penney himself had entered the leisure class. After his zealous recruiting and training efforts in the early 1920s, Penney was now mainly concerned with living the good life, improving his prize-winning Guernsey herd, and guiding the vast J. C. Penney philanthropy. Penney was giving away great piles of money while his colleagues were still busy piling it up.

Then, for many, the stock market disaster produced the final cleavage. It turned out that Penney, of all people, had violated his most sacrosanct principle. He had been profligate. No matter that the impulse had been largely charitable, James Cash Penney had been a reckless spendthrift of gigantic proportions .

On borrowed money.

And now there was hell to pay. But among the many Penney managers and executives who had survived the financial calamity, few were willing to extend a hand. Their feeling of disrespect toward Penney was exacerbated by the times. When Penney hit rock bottom, so did much of the nation. Anywhere one looked , there were honest workers in dire need. And a survivor with means was not quick to sympathize with such a self-assured man who had lost so much so quickly and so recklessly.

Still there were some men who remained loyal, who had not disregarded the fact that the source of their power and money had been in the mind and strength of one man. However flawed the founder may have been, they revered the genius of Penney, the man who recognized and drove the simple brilliance of the manager-partner concept.

Earl Sams provided the quiet leadership in a fund-raising campaign to rehabilitate the founder. And Jack Maynard, the best store manager in Penney's Michigan-Ohio district , typified those in the field and in New York who needed no coaxing to contribute.